Medicaid Revitalization Committee Meeting 4

1. Medicaid Revitalization Committee Meeting 4

2. 2 Presentation Outline

3. 3 Managed Care Provisions of House Bill 758 House Bill 758 (HB758) directs the Medicaid Revitalization Committee to consider various reforms related to Medicaid Managed Care: Risk-adjusted premiums for Medicaid recipients enrolled in Medicaid managed care organizations (MCOs), calculated to be actuarially comparable to currently covered services under the Virginia State Plan for Medical Assistance. The actuarially developed risk-adjusted premiums shall be designed to reduce adverse selection and provide incentives for cost containment through identification of chronic illness before the recipient becomes seriously ill because of lack of treatment A transitioning of all recipients remaining in the fee-for-service program to a disease management program, care coordination program, or enrollment in MCOs A requirement that all Medicaid MCOs take steps to phase in implementation of electronic funds transfer technology to add efficiencies to administrative procedures, reduce costs, and avoid mistakes and abuse [Discussed at the August 2 and August 9, 2006 MRC meetings]

4. 4 Overview of Managed Care Managed Care delivery system became popular in the late 80�s for the commercial population The system promised to contain costs and focus on preventive care, prior authorization, and limited networks The HMO model, as designed and implemented, eventually became unsuccessful in the commercial market due to Market changes Provider and consumer pushback Inability to sustain cost containment or trends Consumer requests for flexibility and choice Health plan failure

5. 5 Overview of Managed Care(continued) The traditional managed care model succeeded in the Medicaid market Model grew stronger in the 90�s with the concept of preventive care, networks, prior authorization Model proved it worked better than the fee-for-service model in urban areas States which implemented managed care experienced better health outcomes, stronger provider networks and reduced utilization trends Currently 36 states operate programs using managed care organizations (MCOs)

6. 6 Overview of Managed Care(continued) Each of the 36 states has variations of the MCO model � variations include: Full Risk versus Non Risk payment model � more risk models � allows for more autonomy Various packages � From flexible benefits, cost sharing, enhanced services, behavioral health and pharmacy carve outs Enrollment - Mandatory vs. voluntary enrollment Populations - Families and children vs. aged, blind, and disabled, foster care, LTC Philosophy - heavily regulated to laissez faire [A handout with more detail on other states� programs was provided in the August 9th meeting packets and is available on the MRC web-site]

7. 7 Virginia�s Medicaid/FAMIS Managed Care Program: Overview The managed care organization program began as a pilot project in 1996 which included four MCOs servicing seven localities in Tidewater Virginia is one of a few states that integrated the aged, blind and disabled population from its inception Through several regional conversions, MCOs are now operating in 110 Virginia localities DMAS� decision to convert more areas to managed care organizations is based on a proven record of achievement displayed by positive health outcomes, enrollee satisfaction ratings and national recognition

8. 8 Virginia�s Medicaid/FAMIS Managed Care Program: Overview(continued)

9. 9 Virginia�s Medicaid/FAMIS Managed Care Program: Overview(continued)

10. 10 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics

11. 11 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics(continued)

12. 12 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics(continued)

13. 13 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics(continued)

14. 14 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics(continued)

15. 15 Virginia�s Medicaid/FAMIS Managed Care Program: Statistics(continued)

16. 16 Virginia�s Medicaid/FAMIS Managed Care Program: Functionality How the Virginia Program Works Federal Authority 1915 (b) Wavier renews every two years with CMS CMS provides policies and regulations State Authority Regulations State Licensing Must be licensed by BOI for solvency, market conduct National Accreditation We prefer that the health plans obtain accreditation from National Committee of Quality Assurance (NCQA)

17. 17 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) Education Must provide enrollee and provider education plans Enrollment and Information dissemination is handled by the enrollment broker All enrollees receive member handbooks, provider directories, newsletters, and health information DMAS Contract Required to meet the Department�s Access, Financial, and Quality standards. Contract includes standards for: Services and networks Monitoring/reporting Capitation

18. 18 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) MCOs provide most Medicaid medically necessary services, as outlined in contract, within their provider network, for a set capitation rate Some services are carved out such as dental and mental health related state plan option services Prior authorization limits, pharmacy, etc. are designated by plan Plans must handle membership, claims, outreach & education, services, complaints, and appeals

19. 19 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) MCOs provide many value added benefits to Medicaid recipients: Services Patient Education Information - All enrollees receive member handbooks, provider directories, newsletters, and health information (available in English and Spanish) Enhanced Services - Most provide services above Medicaid covered services. Enhanced services include vision services for adults Case Management for special needs and identified populations 24 Hour Advice and Triage Nurse Helpline - A toll-free number for individuals to call a health care professional to discuss information on a disease or illness (e.g. asthma, pregnancy), or receive advice on the treatment of a minor fever, accident, or illness Disease/Health Management Programs - Provide disease management programs and patient/outreach information on how to manage asthma, diabetes, maternity, etc.

20. 20 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) Networks Provider Recruitment � Actively recruit Medicaid providers into their networks. MCO recruitment activities have resulted in a net increase in the number of providers of healthcare services to Medicaid recipients Provider Credentialing � All providers go through a rigorous process that includes, but is not limited to, the verification of licensure, malpractice verification, site visits, and education. Re-credentialing is required every two years Provider networks have increased due to MCOs ability to: Leverage their commercial networks and affiliations Utilize methods and rates of payments that are different than Medicaid�s Utilize out of network providers Utilize incentive programs for providers

21. 21 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) DMAS monitors the MCOs through: reporting, contract compliance, monthly meetings, network reviews, on-site visits, appeals, complaint monitoring, independent assessments, and focus pattern of care studies

22. 22 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) DMAS Monitors:

23. 23 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) DMAS Collects:

24. 24 Virginia�s Medicaid/FAMIS Managed Care Program : Functionality (continued) Monitoring Results The contracted external quality review organization conducts an Operational Systems Review of each MCO�s policies, procedures and services in four main areas: Enrollee Rights and Protections, Quality Assessment and Performance Improvement and Grievance Systems This annual evaluation was conducted during January 1, 2004 through December 31, 2004 to monitor and validate the overall quality performance of the MCOs. The compliance scale ranges from 0-100

25. 25 Virginia�s Medicaid/FAMIS Managed Care Program: Payment Capitation payments under the Medallion II program are essentially risk-adjusted premiums predetermined by certain age/sex/region and eligibility category groupings for each contracted MCO FAMIS rates are also differentiated based on income, but are not differentiated by region or health plan Like other states, base rates are set based on MCO encounter data and actuarial judgment MCO base rates are risk-adjusted using the Chronic Illness and Disability Payment System (CDPS) [NOTE: This is the risk-adjustment methodology that Florida intends to utilize in their reform effort] This allows one health plan to receive more or less than a health plan in their same area because one health plan's mix of recipients may exhibit, on average, more serious health concerns and therefore, higher expected costs. CDPS accounts for this higher or lower risk by adjusting base rates appropriately to reflect the recipient mix Relevant fee-for-service experience is considered in the CDPS calculations

26. 26 Virginia�s Medicaid/FAMIS Managed Care Program: Achievements U.S. News & World Report ranked Anthem 10th and Optima 23rd among the top 25 Medicaid health plans in the country A complex methodology was utilized to develop the national rankings and is based on the health plans' National Committee for Quality Assurance Accreditation Standards score and the following four measures: access to care, overall member satisfaction, prevention, and treatment Anthem, Optima, and Southern Health plans have received the Excellent rating from NCQA Virginia Premier and Amerigroup currently have Utilization Review Accreditation Commission (URAC) accreditation and are pursuing NCQA

27. 27 Virginia�s Medicaid/FAMIS Managed Care Program: Expansion Goals Wide The Department values the �two or more contracted MCO program model� in a locality as the best option for our programs The Department wants to consider expanding the MCO programs in areas that are currently not being served by two contracted MCOs The Department wants to consider expansion of the MCO programs in current MCO localities, from a program strengthening/stabilization perspective, as well as in those areas where no Medicaid/FAMIS contracted MCOs currently operate Deep Long Term Care - The Department needs to consider options where managed care can have a positive affect [to be addressed with the LTC blueprint] Eligibility Groups � Other groups are being considered (foster care children, aged groups, etc.) that fit in the model. The ABD 80% group was added July 2006 Medicaid Reform � The Department and the Revitalization Committee is looking at Florida, South Carolina, and other states regarding Medicaid Reform proposals

28. 28 Virginia�s Medicaid/FAMIS Managed Care Program: Expansion Challenges The future expansion of Virginia�s managed care program may be very difficult for a variety or reasons. For example: Most of the remaining areas currently without Medicaid managed care coverage are extremely rural It remains to be seen if the same model implemented in urban areas will work for rural areas, especially when there is a general lack of providers (not just Medicaid) and a lack of managed care (both commercial and Medicaid) in the region There is an increased cost to providing outreach and managed care programs in rural areas

29. 29 Virginia�s Medicaid/FAMIS Managed Care Program: Expansion Challenges (continued) Reluctance to contract The lack of managed care penetration (commercial and otherwise) in remaining fee-for-service areas illustrates the likelihood that some providers in these areas are resistant to contracting with managed care plans (generally) Despite recent rate increases, reimbursement issues remain a major point of significant provider pushback, primarily among pediatricians and other specialties, regarding the financial viability of practices with significant Medicaid volume DMAS is concerned this not only impacts future expansions, but is impacting the viability of managed care in some existing regions as well

30. 30 Future Direction of Virginia�s Medicaid/FAMIS Managed Care Program Discussion Points for Committee Consideration The Department of Medical Assistance Services (DMAS) should/should not continue working toward the goal of expanding managed care into new regions and across additional eligibility categories where feasible under the current defined benefit approach. This program should/should not continue to utilize a risk-adjustment methodology in the determination of capitation/premium payments to contracted Managed Care Organizations [DMAS is already working toward further expansions both regionally and in terms of additional recipient types. Also, the program already utilizes a risk-based premium structure in setting capitation rates for participating Managed Care Organizations]

31. 31 Future Direction of Virginia�s Medicaid/FAMIS Managed Care Program(continued) Discussion Points for Committee Consideration (continued) The Department of Medical Assistance Services should/should not seek federal approval and funding to modify and expand managed care (statewide/certain regions) under a market-driven, defined contribution approach. Medicaid premiums should/should not continue to be determined through a risk-adjusted methodology. Mandatory (and certain optional/with or without limits) Medicaid services should/should not be required in participating managed care plans, however plans should/should not have the flexibility to offer additional benefits. This program should be� (mandatory/optional/combination) for�(defined eligibility categories/all recipients). [Currently, the participating managed care organizations are required to provide mandatory services (except for certain carved-out services like dental) and certain optional services, as defined in annual contracts. The model is a defined benefit approach where (generally) medically necessary covered services must be provided regardless of the cost per recipient]

32. 32 Future Direction of Virginia�s Medicaid/FAMIS Managed Care Program(continued) Discussion Points for Committee Consideration (continued) The Department of Medical Assistance Services should/should not seek federal approval to modify fee-for-service and/or managed care (statewide/certain regions) for (all/certain recipients) to include a provision for a monetarily-defined benefit cap(s) that, once reached, would serve to terminate Medicaid expenditures for healthcare services on behalf of the otherwise eligible recipient. The appropriate benefit cap(s) shall be determined by (who?) and should/should not be indexed for medical inflation using (what?) [The State�s costs per member in the Medallion II program are already capped at the monthly per member per month (PMPM) capitation fees paid to participating Managed Care Organizations (MCOs). Medallion II is a full-risk managed care model in which the MCOs accept the PMPM as payment-in-full regardless of the cost of services actually incurred by the individual recipients. There are no monetary caps where once reached, services would be denied, nor are there risk-corridors or other re-insurance options in which the state would assume the cost of services beyond a certain monetary threshold]

33. 33 Presentation Outline

34. 34 Employer-Sponsored Health Coverage Provisions of House Bill 758 House Bill 758 (HB758) includes references to employer-sponsored health coverage in delineating the options for consideration by the Revitalization committee: Voluntary enhanced benefits accounts for �individuals wishing to exercise the option to purchase private health insurance through their employer�� �Employer-sponsored insurance options, for recipients who have access to such insurance, that provides such individuals with enhanced benefits accounts having deposits of the actuarially prescribed amount � that may be used to purchase private health insurance through their employer��

35. 35 Employer-Sponsored Health Coverage Provisions of House Bill 758(continued) It is clear from this language that HB758 directs the Committee to examine the option of allowing Medicaid eligible individuals with access to employer-sponsored health insurance to receive a Medicaid subsidy up to an actuarially-defined limit to assist in the purchase of such employer-sponsored coverage Virginia already has programs that allow for the Medicaid and FAMIS programs to provide assistance toward the premium costs of non-Medicaid health insurance HIPP FAMIS Select Medicare Premium Assistance �Buy-In� Program Additionally, Virginia is implementing or considering implementing Buy-In programs to Medicaid and FAMIS Medicaid Buy-in SCHIP Buy-in Family Opportunity Act

36. 36 Health Insurance Premium Payment (HIPP) Program In 1991, Social Security Act was amended to require State Medicaid programs to pay premiums for employer group health insurance for Medicaid eligible individuals when such premium assistance is determined to be cost effective the Balanced Budget Act of 1997 made the HIPP program optional. When DMAS is advised of the availability of employer insurance to a client, HIPP staff contacts the employer to obtain information about the cost and coverage of the health insurance policy the cost of the insurance premium is compared to what it costs the Commonwealth to provide coverage to an individual of similar age and gender under the Medallion II program if the premium is equal to or less that the Medallion II cost, DMAS advises the client that the agency will pay for the coverage and the client enrolls in the employer-sponsored plan (the program is mandatory if cost effective)

37. 37 Health Insurance Premium Payment (HIPP) Program(continued) Generally, the client/policy holder is reimbursed directly each month upon presenting evidence of the premium withholding or payment in rare instances, reimbursement may be sent to the employer Each month, HIPP analysts review their active cases to determine that: the client still has Medicaid eligibility; the client is still employed; the health insurance policy is still in effect; and the premium amount is still correct and being deducted from the employee�s check As of August 2006, the HIPP program had an active caseload of 1,338 cases

38. 38 FAMIS Select FAMIS Select is a program to subsidize the purchase of private or employer-sponsored health insurance for families with access to such coverage a child must be eligible for the FAMIS program the FAMIS program will provide $100 per month per child (not to exceed the total cost of the family premium for the insurance purchased) It is important to note that this family premium cap allows for the possibility that FAMIS Select could subsidize the adult(s) covered under the family plan in addition to the child(ren), depending on the premium cost and the amount of assistance provided If enrolled in FAMIS Select, only the private plan�s benefits are available; the child is not also enrolled in the FAMIS plan and is not entitled to FAMIS benefits not provided under the purchased plan, except: Child immunizations will be covered by FAMIS if the private/ employer-sponsored plan does not cover them If enrolled in FAMIS Select, the purchased plan�s cost sharing applies

39. 39 FAMIS Select(continued) FAMIS recipients have the option to end participation in FAMIS Select at any time, and revert back to the FAMIS program Eligibility for FAMIS (and therefore, subsidy under FAMIS Select) is still subject to an annual 12 month review Recipients must show monthly proof of coverage and premium payment to remain in FAMIS Select FAMIS Select was implemented on August 1, 2005 As of the beginning of August 2006, there were 284 children actively enrolled Over 200 additional adults and other non-FAMIS eligible children are also covered by the families� insurance policies A total of 353 children received services through FAMIS Select during the first year of operation

40. 40 Medicare �Buy-In� Medicaid has subsidized Medicare cost sharing for certain low-income Medicare beneficiaries since the two programs were enacted as part of the Social Security Amendments of 1965. �Buy-in� refers to the general practice of State Medicaid agencies paying Medicare premiums to the federal government for dually eligible beneficiaries.

41. 41 Medicare �Buy-In�(continued) States use this administrative arrangement for Part A, Part B, or both. Buy in for Part A (much less common): Elderly and disabled people who receive Social Security benefits are generally entitled to Medicare Part A without having to pay a premium. However, a minority of elderly persons have insufficient work history and do not qualify for Social Security. They can obtain Medicare Part A by paying a premium ($393 per month in 2006). If they qualify for Medicaid, States may use buy-in to enroll them and to pay this amount on their behalf. Buy in for Part B (more common): Part B is not an entitlement in that it requires all participants to pay a premium ($88.50 per month for 2006).

42. 42 Medicare �Buy-In�(continued) State Medicaid agencies are required to assist low-income Medicare beneficiaries to pay Medicare cost sharing, defined as premiums, deductibles, and coinsurance, as follows: All cost sharing for those below the Federal Poverty Level (FPL) and otherwise qualifying Part B premiums for persons with incomes 100-120 percent of FPL Part B premiums for persons 120-135 percent of FPL, limited by funding availability Part A premiums for persons with disabilities who have worked their way off Social Security and whose incomes are below 200 percent of FPL

43. 43 Medicare �Buy-In�(continued) DMAS provides limited coverage to the following groups: Qualified Medicare Beneficiary (QMB): must be eligible for Medicare Part A. Income must be at or below 100% of the Federal Poverty Income Guidelines and resources must be not more than $4,000 for a single person and $6,000 for a couple. Medicaid pays the Medicare Part A (if applicable) and Part B premiums and the coinsurance and deductibles that Medicare does not pay [August 1 � 20,383 recipients] Special Low-Income Medicare Beneficiary (SLMB): must be eligible for Medicare Part A. Income must be between 100% and 120% of the Federal Poverty Income Guidelines and resources must not be more than $4,000 for a single individual and $6,000 for a couple. Medicaid pays the Medicare Part B premiums [August 1 � 14,525 recipients] Qualified Individual (QI): must be eligible for Medicare Part A. Income must equal or exceed 120% but be less than 135% of the Federal Poverty Income Guidelines. Resources must be at or below $4,000 for a single person and $6,000 for a couple. Medicaid pays the Medicare Part B premiums [August 1 � 5,154 recipients] Qualified Disabled and Working Individual (QDWI): Medicaid can pay Medicare Part A premiums for certain disabled individuals who lose Medicare coverage because of work. Individuals must have income below 200% of the Federal Poverty Income Guidelines and resources of no more than twice the standard allowed under SSI [August 1 � 20 recipients]

44. 44 Medicaid �Buy-In� Program  In addition to programs to assist in the premium costs of non-Medicaid insurance programs, DMAS is also implementing a Medicaid Buy-In program During the 2006 Session, the Governor and General Assembly authorized and funded DMAS to establish a Medicaid Buy-In under a State plan amendment Prior attempts at a similar program through a Medicaid demonstration waiver had been unsuccessful in terms of federal approval The Medicaid Buy-In program will allow certain working people with disabilities to pay a premium to participate in the Medicaid program The potential loss of Medicaid eligibility due to an ability to work and earn income has been a major disincentive for certain disabled individuals to seek employment

45. 45 Medicaid �Buy-In� Program (continued) The program will be targeted to recipients or applicants that meet the income, asset and eligibility requirements for the Medicaid-covered group of individuals who are blind or disabled and have incomes that do not exceed 80% of the Federal Poverty Level ($654/mo. in 2006) The Appropriation Act requires the new Medicaid Buy-In program to be implemented by January 1, 2007 DMAS is currently planning the implementation: systems changes the premium collection process State regulations State Plan amendment

46. 46 SCHIP �Buy-In� Program  Item 301 E of the 2006 Appropriation Act directed DMAS to: Review and evaluate State Children�s Health insurance Program (SCHIP) Buy-In programs for children that are operating in other states, which allow families with income in excess of the state�s Title XXI program eligibility limits to purchase health insurance for their children. This review, including recommendations regarding the development of a SCHIP buy-in program in Virginia, shall be presented to the Chairman of the House Appropriations and the Senate finance Committees, and the Joint Commission on Health Care by October 1, 2006. The Division of Maternal & Child Health, with support from the Provider Reimbursement Division, is currently conducting the study A presentation to Joint Commission on Health Care is scheduled for September 14, 2006

47. 47 SCHIP �Buy-In� Program (continued) Preliminary research indicates that: 8 states operate programs utilizing various models Unlike Medicaid Buy-In programs, these are not targeted to disabled individuals Families usually pay the full premium cost, but some states subsidize administrative costs or cover part of the premium to make it more affordable The programs receive no federal matching funds Some states offer programs to all children, while others limit eligibility by income or act as COBRA-like coverage for former SCHIP enrollees All states offer the SCHIP benefit package and most utilize the same contractors The programs are small compared to total SCHIP population

48. 48 Family Opportunity Act  In addition to the Medicaid Buy-In and research into the SCHIP Buy-In programs, DMAS is considering a Deficit Reduction Act (DRA) optional provision, called the Family Opportunity Act, for a Buy-In program established within the Medicaid program The DRA creates a new optional Medicaid eligibility group for children with disabilities under age 19 who meet the SSI disability requirements and whose family income does not exceed 300 percent Federal Poverty Level (FPL) Families would be charged premiums for participation: Premiums for children with family income up to 200 percent FPL, may not exceed 5% of the family income Premiums for children with family income that is between 200% and 300% of the FPL may not exceed 7.5% of family income

49. 49 Family Opportunity Act (continued) States may require families to participate in employer-sponsored family health coverage (if the employer pays at least 50% of the total annual cost of the premium for family coverage). States must reduce premiums by an amount that reasonably reflects the premium contribution of the family for employer-sponsored family health coverage According to the DRA, states can begin to phase in coverage starting in January 2007 Coverage for children through age 6 begins second to fourth quarters of federal fiscal year (FFY) 2007 Coverage for children through age 12 begins in FFY 2008 Coverage for children through age 18 begins in FFY 2009

50. 50 Employer Sponsored Insurance inOther State Reform Efforts: Florida Employer-Sponsored Health Insurance (ESI) is an integral part of the Florida reform effort and is listed as one of the four fundamental elements of the reform (along with Risk-Adjusted Premiums, Enhanced Benefit Accounts, and the Low-Income Pool) Florida sees ESI as a way to bridge public and private coverage and a way to foster independence among recipients by providing individuals with a subsidy to move to private health insurance Under the Reform program, Medicaid recipients can voluntarily opt out of Medicaid coverage and enroll in their employer�s health insurance plan (with the State contributing toward the cost of that plan up to the Medicaid premium amount) Florida Medicaid will not provide any wrap-around for cost sharing or benefits

51. 51 Employer Sponsored Insurance inOther State Reform Efforts: Florida (continued) An enrollee who chooses to opt-out of the Medicaid Reform plan to enroll in ESI will have 90 days to opt back into a Medicaid Reform Plan If the ESI premium is lower than the Medicaid premium, recipients can use the difference to purchase family coverage or supplemental coverage offered by the employer, although the State can limit the amount of supplemental coverage purchased Payment of premium will be made directly to the employer whenever possible

52. 52 Employer Sponsored Insurance inOther State Reform Efforts: South Carolina South Carolina�s waiver (not approved) has two �Option-Out� programs (ESI and a Self-Directed Plan) where beneficiaries choose to receive medical care outside the Medicaid program and Medicaid only provides a defined amount of financial support Since the State appears to be planning to offer a voluntary option for enrollment, it will also incorporate a waiver of traditional federal requirements: Recipients who opt for ESI or self-directed plans would agree to accept whatever services are covered by the plan, with whatever cost sharing the plan imposes (no wrap-around provided by the State) The State would pay up to the amount it would have paid to cover the recipient under Medicaid (if the optional plan�s premium is higher, the recipient would pay the difference)

53. 53 Employer Sponsored Insurance inOther State Reform Efforts: South Carolina (continued) Enrollment counselors would guide beneficiaries through process of selecting the best plan for their needs Because ESI is family based, South Carolina expects that paying employers� premiums will provide health insurance to some family members who would not be eligible for the regular Medicaid program [NOTE: The information provided by South Carolina is from their waiver application which has not been approved. South Carolina has indicated that it is exploring the feasibility of implementing its reform program through the State Plan Amendment route under the authority of the DRA]

54. 54 Employer Sponsored Insurance inOther State Reform Efforts: Kentucky The Kentucky Medicaid program currently has a Health Insurance Premium Payment Program (HIPP), but only has 14 recipients enrolled statewide. The State plans to educate eligibility workers about the existence of the HIPP program. The Kentucky reform plans to strengthen the current HIPP program and will require beneficiaries to enroll in employer-sponsored private health insurance if it is available and if it is more cost-effective Kentucky indicates that they will have a second program that will allow members to �opt-in� to ESI. After 90 days, members who have opted-in may reapply for services under the reform program. Choice counseling will be provided to ensure eligible members can make a fully qualified decision regarding their option to voluntarily �opt-in� to ESI. [NOTE: No further details were provided on this �opt-in� program]

55. 55 Employer Sponsored Insurance inOther State Reform Efforts: Idaho Idaho is dividing its Medicaid beneficiaries into three groups according to their identified health needs: low-income children and working age adults, individuals with disabilities, and elders. Under the State Plan for Low-Income Children and Working Age Adults, one of the goals is to strengthen the employer-based health insurance system. Currently, Idaho Medicaid is limited in its ability to offer premium assistance as an option to children and adults in mandatory eligibility categories. The reform proposes to expand premium assistance to all children and working age adults who would prefer to enroll in commercial insurance Idaho also indicates it plans to change its rules to allow children of families who currently have health insurance to qualify for premium assistance (this component appears to still be in the preliminary planning stages and no details are available yet)

56. 56 Future Direction of Virginia�s Employer-Sponsored Alternatives to Medicaid Discussion Point for Committee Consideration The Department of Medical Assistance Services (DMAS) should/should not continue and expand programs for public subsidy of employer-sponsored and/or private health insurance. This program should/should not be mandatory and/or voluntary for certain Medicaid and FAMIS recipients. [DMAS currently operates subsidy programs in both Medicaid and FAMIS, but the HIPP program is not mandatory unless it is cost-effective to the Virginia Medicaid program, and the FAMIS Select program is optional. The HIPP program, because it is mandatory when cost effective, also must provide for wrap-around services through Medicaid to account for differences in benefit design and cost sharing]

57. 57 Presentation Outline

58. 58 Use of Benchmark Packages Currently under Medicaid, there is limited flexibility to alter benefits through waivers This DRA provision allows States, through a State Plan Amendment, to alter benefits provided to certain Medicaid recipients, as long as they meet or exceed benefits in the following benchmark plans: Blue Cross/Blue Shield PPO plan under the FEHBP State employee health plan Health coverage offered by largest commercial HMO States can develop their own benefit package as long as it is equivalent to one of the benchmarks and approved by the Secretary of Health and Human Services (through CMS)

59. 59 Use of Benchmark Packages(continued) These packages must include the following basic services: Inpatient and outpatient hospital services Physicians' surgical and medical services Laboratory and x-ray services Well-baby and well-child care, including age-appropriate immunizations Other appropriate preventive services, as designated by the Secretary A State can provide additional or wrap-around benefits

60. 60 Use of Benchmark Packages(continued) If the benchmark package includes the following services, the benchmark-equivalent package has to offer coverage actuarially equal to at least 75% for these services: Prescription drugs Mental health services Vision services Hearing services Actuarial value is determined by a member of the American Academy of Actuaries using generally accepted actuarial principles and methodologies States must provide access to Rural Health Clinics and Federally Qualified Health Clinics and follow federal guidelines for payment for these services

61. 61 Use of Benchmark Packages(continued)

62. 62 Use of Benchmark Packages(continued) Several States have authority to alter Medicaid benefit packages: Florida Health Plans in 2 counties will be able to tailor benefits for certain populations as long as all mandatory services are covered and the overall package is actuarially equivalent to current State Plan package West Virginia Pilot in 3 counties will provide reduced benefits to children and parents unless they sign a statement agreeing to engage in healthy behaviors and use their designated provider Idaho Will reduce its eligibility groups to 3 (healthy children and adults, the disabled, and dual eligibles) and tailor their benefit packages to each of these three groups. Enrollment for dual eligibles is optional

63. 63 Use of Benchmark Packages(continued) Pros: Tailoring benefits to specific groups (Eliminate services not needed) Adding preventive services or incentives for healthy behaviors Potential cost savings Cons: Significant operational costs/impacts Both FFS and MCO payment remain based on service utilization (less direct for MCO capitation rates, but still utilization driven), so cost savings for eliminated services would be mitigated to the extent these services were not utilized by certain recipients in the first place Most expensive populations are excluded, EPSDT must still be provided to children

64. 64 Presentation Outline

65. 65 Cost Sharing Flexibility in the Deficit Reduction Act of 2005 The Deficit Reduction Act of 2005 (DRA) provides State Medicaid agencies additional flexibility in the determination of cost sharing requirements for certain non-exempt Medicaid recipients Exemptions from cost sharing are generally made for: services furnished to individuals under 18 years of age services furnished to pregnant women services furnished to any individual who is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other medical institution, if such individual is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of his income required for personal needs services furnished to an individual who is receiving hospice care women receiving Medicaid on basis of breast or cervical cancer

66. 66 DRA Cost Sharing Flexibility: Section 6041 � General Cost Sharing  DRA Section 6041: STATE OPTION FOR ALTERNATIVE MEDICAID PREMIUMS AND COST SHARING For non-exempt recipients with family income from 100% to 150% of the federal poverty level (FPL), the DRA now allows: Cost sharing up to 10% of the cost of the item or service Total cost sharing is not to exceed 5% percent of total family income in a given period (monthly or quarterly at state option) No premiums are allowed For non-exempt recipients with family income greater than 150% FPL, the DRA now allows: Cost sharing up to 20% of the cost of the item or service Total cost sharing (including premiums) not to exceed 5% percent of total family income in a given period (monthly or quarterly at state option)

67. 67 DRA Cost Sharing Flexibility: Section 6041 � General Cost Sharing(continued) DRA Section 6041 includes a provision for the enforcement of this cost sharing which allows a provider to deny service on the basis of the recipients failure to pay the required co-payment DRA Section 6041 also allows state Medicaid programs to apply premiums � failure to pay the premium can result in the termination of eligibility

68. 68 DRA Cost Sharing Flexibility: Section 6041 � General Cost Sharing(continued) Currently, DMAS does not impose premiums for Medicaid or FAMIS Co-payment amounts are the �nominal� amounts allowed currently under �1916 of the Social Security Act Co-payments are difficult to enforce, with non-payment resulting in additional strain on net reimbursement on providers, with services still provided to the recipient DMAS typically reduces provider payment by the co-payment amount, under the theory that the provider will collect from the recipient There are very few non-exempt recipients in the Virginia Medicaid program within the income range specified in this DRA provision (there are some limited benefit dual eligible recipients), therefore, this optional DRA provision would have a limited impact in Virginia

69. 69 DRA Cost Sharing Flexibility: Section 6042 � Rx Cost Sharing DRA Section 6042: SPECIAL RULES FOR COST SHARING FOR PRESCRIPTION DRUGS For non-exempt recipients with income greater than 150% FPL, the DRA now allows: Cost sharing up to 20% of the cost of the drug for non-preferred drugs Cost sharing remains �nominal� for incomes under 150% FPL Virginia Medicaid currently charges a $1 co-payment for generic drugs and a $3 co-payment for brand-name drugs Virginia Medicaid currently operates under a Preferred Drug List (PDL) Non-PDL drugs do not carry a higher co-payment, but are required to be prior authorized in order to be reimbursable by DMAS

70. 70 DRA Cost Sharing Flexibility: Section 6042 � Rx Cost Sharing(continued) Section 6042 would allow higher co-payments when non-preferred drugs were prior-authorized by DMAS if the prescribing physician determines that the preferred drug for treatment of the same condition either would not be as effective for the individual or would have adverse effects for the individual or both, the state must apply cost sharing levels applicable to a preferred drug These prescription drug co-payments would be counted toward the aggregate cap described in the discussion of Section 6041 These provisions appear to adhere to the same enforceability provision as Section 6041 This provision is optional for state Medicaid programs

71. 71 DRA Cost Sharing Flexibility: Section 6043 � ER Cost Sharing DRA Section 6043. EMERGENCY ROOM COPAYMENTS FOR NON-EMERGENCY CARE Providers (at state option) may impose and require cost sharing on non-emergency services furnished in an emergency room if: Recipient has access to alternative means of receiving care Hospital informs the recipient of cost sharing expectations once initial screening is complete but prior to other services being rendered or cost sharing occurring Virginia Medicaid currently discourages the use of emergency rooms for non-emergency services through reduced payment to providers and through management of care in the Medallion II and MEDALLION PCCM programs

72. 72 DRA Cost Sharing Flexibility: Section 6043 � ER Cost Sharing(continued) Under DRA Section 6043 For poorest individuals (less than 150% FPL), cost sharing cannot exceed twice the nominal amount under �1916 of the Social Security Act For those non-exempt recipients with income above 150% FPL, Section 6041 provisions apply For otherwise exempt populations, cost sharing may be imposed (under certain circumstances) at the nominal amount under �1916 of the Social Security Act This cost sharing is subject to the family income cap defined in DRA Section 6041

73. 73 DRA Cost Sharing Flexibility: Section 6043 � ER Cost Sharing(continued) This provision does not waive hospitals� obligations with respect to screening and stabilization of an emergency medical condition under the Emergency Medical Treatment and Active Labor Act (EMTALA) Nor does it modify any obligations under either State or Federal standards relating to the application of the prudent-layperson standard with respect to payment or coverage of emergency services This provision is optional for state Medicaid programs